Grayscale Investments is aiming to expand its spot crypto offerings with an exchange-traded fund (ETF) tracking the price of Polkadot, according to a filing on Tuesday with the Securities and Exchange Commission.
Nasdaq submitted an application for a 19b-4 rules change that would allow the Grayscale Polkadot Trust (DOT) to begin trading on the exchange. The SEC now has 45 days to acknowledge the filing.
“The Shares [of the Trust] are designed to provide investors with a cost-effective and convenient way to gain investment exposure to DOT,” the filing said.
The application follows Stamford, Connecticut-based crypto asset manager’s request to convert its XRP Trust into an ETF and to offer a fund based on the ongoing performance of Cardano. The new products would widen Grayscale’s offerings from its current ETFs based on the spot price of Bitcoin and Ethereum, and would offer the latest evidence of issuers’ attempts to meet surging demand for crypto-focused products.
“We continue to appreciate the opportunity to innovate and constructively engage with regulators as they review crypto ETPs, and we remain optimistic about the potential of bringing digital assets further into the US regulatory perimeter in the ETP wrapper on behalf of our clients,” a Grayscale spokesperson told Decrypt.
Last month, crypto fund issuer 21Shares also applied for a spot ETF tracking Polkadot, the token of the Polkadot blockchain and 26th-largest digital asset with a $6.7 billion market cap. Polkadot is a blockchain network that connects various chains focused on specific apps and ecosystems.
Polkadot was recently trading at $4.42, a 6.5% drop over the past 24 hours, according to markets data provider CoinGecko. Its decline has dovetailed with wider losses in crypto markets in recent days, with most major assets in the red over the past day.
Earlier this month, the SEC acknowledged and published details of NYSE Arca’s proposal to list shares of the XRP Trust on Thursday, revealing an extensive framework designed to address regulatory concerns around trading.
Spot Bitcoin funds soar
Spot Bitcoin and Ethereum funds have been wildly successful, with the former netting more than $40 billion in net inflows, according to UK-based asset manager Farside Investors. BlackRock’s Bitcoin Trust (IBIT) now has about $55 billion in assets under management.
In an interview with Decrypt, on TuesdayBloomberg Senior Analyst Eric Balchunas said that the Polkadot filing shows how issuers see opportunities as the SEC has become “more lenient and open to new (crypto) products.”
“This is what ETF issuers do, they push the envelope,” he said. “You’ll find all these attempts to cash in, a lot of spaghetti gets thrown at the wall.”
He added: “The floodgates were going to be open anyway” even with Gary Gensler heading the SEC, but “now the floodgates are fully open.”
Balchunas has yet to set odds on a Polkadot approval, although he described them as “pretty good.” He penciled in a 70% probability that the regulator will approve applications for Solana-based funds from Bitwise, Canary, 21Shares and VanEck, along with Grayscale’s filing.
“I’d like to see the fund acknowledged by the SEC first,” he said. The more we go into a normal process, the more the odds go up.”
Edited by Andrew Hayward
Editor’s note: This story was updated after publication to include comment from Grayscale.
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